Washington Week: Insurance, State Actions Top News

WASHINGTON -- Several studies highlighting insurance issues were released this week, including one on federal programs for kids and two others focused on employer-provided medical coverage.

Meanwhile, a Republican governor and a Democratic senator are both trying to get their respective states exempted from following certain provisions of the healthcare reform law.

Five Million Eligible Kids Without Insurance

About five million children who are eligible for government health insurance programs are not enrolled in the programs, a new study published in Health Affairs found.

An estimated 7.3 million U.S. kids were uninsured in 2008, and 65% of them were eligible for coverage through Medicaid or the Children's Health Insurance Program (CHIP), the report found.

"No child should have to skip a doctor's appointment or go without the medicine they need because their family can't pay," Health and Human Services (HHS) Secretary Kathleen Sebelius said in a webcast event announcing the report's findings. "Despite the great advances that states have made over the years, there are nearly five million uninsured children who are currently eligible for coverage but are not enrolled."

Sebelius was joined by Secretary of Education Arne Duncan and Cindy Mann, director of the Center for Medicaid, to urge government workers, community-based organizations, health centers, and school districts to find ways to enroll the five million kids.

The bulk of the children who were eligible for insurance but not enrolled lived in three states: California, Texas, and Florida, said Mann.

To be eligible for CHIP or Medicaid, a child's family has to have an income below about $45,000 annually.

"This new data will help us to focus our efforts and our grant funding where they are most needed," Sebelius said in a statement. "We now have a much better sense of where most uninsured children live, and which communities may need more help."

The Children's Health Insurance Program Reauthorization Act (CHIPRA) and the healthcare reform law -- the Affordable Care Act (ACA) -- provide $120 million for grants to promote strategies to enroll people in government health insurance, according to HHS. Obama signed CHIPRA shortly after he took office, and signed the ACA on March 23.

Employer-Based Coverage to Grow

Employer-sponsored insurance will not only remain a cornerstone of the American healthcare system, but it will increase in prevalence in the post-healthcare reform environment, according to several researchers.

The ACA likely will result in a large increase in employer-offered insurance, according to a Perspective article published in the Sept. 1 issue of the New England Journal of Medicine (NEJM).

In the article, researchers from the RAND Corporation used a simulation model to predict how the healthcare market will change because of healthcare reform, and determined that the number of workers offered coverage post-reform will increase from the current 115 million workers, or 85% of the U.S. work force, to about 129 million workers, or 95% of the work force.

The driving factors that will increase the prevalence of employer-sponsored insurance are the threat of being penalized and the greater availability of lower-cost plans, the researchers said.

While the employer-sponsored structure is likely to remain solid, the authors of the NEJM article said the nature of employer-sponsored coverage may change and more employers may opt to offer their employees plans through the exchanges.

Another research group -- the Commonwealth Fund -- released a report Thursday that also predicts employer-based coverage will remain solid and that tax credits available to small businesses will spur increased coverage for 16.6 million small business employees.

The tax credits -- which were mandated by the ACA -- will equal 35% of the employer's premium contribution in 2010, and increase to 50% in 2014.

Over the next 10 years, small businesses and organizations could receive an estimated $40 billion in federal support through the premium credit program, the report concluded.

Worker Share of Healthcare Costs Grows

Workers are paying 14% more for their employer-sponsored plans than they did last year, as a bigger chunk of healthcare costs shifted from employers to employees, according to a new survey.

Workers paid nearly $3,997 this year toward the cost of family healthcare coverage -- up $482 from the average employee cost in 2009 and a jump of 47% from the average employee share for family coverage in 2005.

Meanwhile, employers are paying an average of $9,773, down $87 from what they paid last year. Moreover, 30% of companies surveyed said they reduced the scope of benefits at the same time that they increased the amount their employees must pay for health insurance in the past year.

The data come from a 2010 Employer Health Benefits Survey released Thursday by the Kaiser Family Foundation and the Health Research & Educational Trust.

The struggling economy has caused businesses to shift more of the costs onto workers by requiring them to pay a greater share of their healthcare costs, Drew Altman, Kaiser Family Foundation president and CEO, said in a Thursday call with reporters.

What employees pay for their healthcare costs has increased much more than their wages, the report found. Since 2005, workers' contributions to premiums have gone up 47% while wages increased 18% (and inflation rose 12%).

The ACA contains provisions that are supposed to slow the growth of healthcare spending, but it's unclear if those savings will translate into savings for the average worker.

States Buck Healthcare Reform Law Provisions

A Republican governor and a Democratic senator are both attempting to exempt their respective states from following certain provisions of the new healthcare reform law, signaling what could emerge as a trend of states trying to distance themselves from the ACA.

Minnesota governor Tim Pawlenty, a Republican, has signed an executive order directing his state's government agencies to not participate in any nonmandatory aspects of the healthcare reform law.

The executive order directs all of Minnesota's executive departments and agencies not to submit applications to the federal government requesting grant funding for programs created under the ACA, unless explicitly approved by the governor's office.

The order calls the ACA "a dramatic attempt to assert federal command and control over this country's healthcare system" and goes on to say that the act "includes unprecedented federal intrusions into individual liberty, including the mandate that individual citizens are compelled to purchase health insurance under penalty of law."

Meanwhile, Sen. Ron Wyden (D-Ore.) also has taken issue with the individual mandate portion of the law and wants Oregon to ignore the requirement that nearly everyone have health insurance starting in 2014.

Wyden wrote a provision in the ACA that would allow states to set up their own healthcare systems as long as they meet minimum standards established by the Department of Health and Human Services. That provision doesn't go into effect until 2017, but in a letter to Oregon's Health and Human Services Department, Wyden said he'd introduce legislation that would allow Oregon to set up its own system in 2014 instead.

Wyden has been a longtime proponent of healthcare reform, and even had his own reform bill written years ago. His legislation, which had bipartisan support and included an individual mandate, was largely ignored during the healthcare reform debate.

Gov't to Pay for Early Retirees

The federal government will begin paying nearly 2,000 employers from a $5-billion fund to provide health insurance for employees who have retired early, HHS Secretary Kathleen Sebelius announced Tuesday.

The ACA includes $5 billion in reinsurance money to help employers maintain coverage for retirees ages 55 and older who are not yet eligible for Medicare. The money will pay for 80% of the cost of an enrollee's health benefits between $15,000 and $90,000.

Employers must use the HHS reimbursement to reduce the employer's own healthcare costs, or to reduce the out-of-pocket costs of the employees, or a combination of both, Jay Angoff, Director of the HHS' Office of Consumer Information and Insurance Oversight, said during a Tuesday afternoon webcast. The program will end in 2014 when new health insurance exchanges will begin operating and early retirees will have other coverage options.

The funding is intended to incentivize employers to continue to provide insurance for early retirees, Sebelius said.

"We know covering early retirees has never been easy," she said. "It's expensive, but it's extremely important and many employers want to continue doing the right thing. If employers are willing to cover retired workers between the ages of 55 and 65, if they're willing to make that investment, then we're going to make it happen and keep it steady until 2014."

HHS will continue to accept applications for the program. It's unclear how far the $5 billion will stretch, Sebelius said.

Groups Certified to be EHR Certifiers

HHS has named two groups that will be in charge of certifying which electronic health record systems meet the federal government's standards for "meaningful use."

HHS' Office of the National Coordinator for Health Information Technology (ONC) named the Chicago-based Certification Commission for Health Information Technology (CCHIT) as well as the Drummond Group in Austin, Texas, as the first two certification boards. ONC will continue to review applications for other certification bodies, according to a press release from HHS.

The announcement marks a major step in the move toward widespread use of electronic health records.

As part of the stimulus bill, the federal government will be offering financial incentives beginning in 2011 to physicians and hospitals that make "meaningful use" of electronic health records -- $44,000 to physicians who see Medicare patients and $63,000 to physicians who see Medicaid patients.

The CCHIT and the Drummond Group will be tasked with certifying which EHR products offered by vendors will allow providers to meet the meaningful use requirements. Providers who purchase the certified EHR products "will have assurance that the products will support achievement of the meaningful use objectives," according to the release.

Over at the FDA, the Anti-Infective Drugs Advisory Committee will meet Tuesday to discuss a new drug application for ceftaroline fosamil for injection to treat adults with community-acquired bacterial pneumonia and complicated skin and skin structure infections.

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